{"id":7933,"date":"2025-07-16T12:51:38","date_gmt":"2025-07-16T12:51:38","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7933"},"modified":"2025-07-16T12:51:40","modified_gmt":"2025-07-16T12:51:40","slug":"gst-composition-scheme","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/gst-composition-scheme\/","title":{"rendered":"GST Composition Scheme"},"content":{"rendered":"<p>The <strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/gst-composition-scheme\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">GST Composition Scheme<\/a><\/strong> is a simplified <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/gst\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>GST<\/a> regime for small <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>tax<\/a>payers. Instead of paying regular <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/gst-rates\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">GST rates<\/a> and filing monthly returns, eligible businesses can pay a <strong>fixed tax rate on turnover<\/strong>, file <strong>quarterly<\/strong>, and submit <strong>one annual return<\/strong>.<\/p>\n\n\n\n<h2 id=\"who-can-opt\" class=\"wp-block-heading\">Who Can Opt?<\/h2>\n\n\n\n<p>You can choose this scheme if:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>For goods (traders\/manufacturers):<\/strong> Aggregate annual turnover &#x2264; &#x20B9;1.5 crore (&#x20B9;75 lakh for special states).<\/li>\n\n\n\n<li><strong>For services:<\/strong> Turnover &#x2264; &#x20B9;50 lakh annually.<\/li>\n\n\n\n<li><strong>Must be intra&#x2011;state supplier<\/strong> &#x2013; no interstate sales.<\/li>\n\n\n\n<li><strong>Not eligible<\/strong> if dealing in exempt goods (like alcohol, petroleum), supplying via e&#x2011;commerce, or providing reverse-charge services.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"tax-rates-under-the-scheme\" class=\"wp-block-heading\">Tax Rates Under the Scheme<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th><strong>Category<\/strong><\/th><th><strong>CGST + SGST<\/strong><\/th><th><strong>Total Rate<\/strong><\/th><\/tr><\/thead><tbody><tr><td>Traders &amp; Manufacturers (Goods)<\/td><td>0.5% + 0.5%<\/td><td><strong>1%<\/strong><\/td><\/tr><tr><td>Restaurants (non-alcoholic)<\/td><td>2.5% + 2.5%<\/td><td><strong>5%<\/strong><\/td><\/tr><tr><td>Service Providers (eligible)<\/td><td>3% + 3%<\/td><td><strong>6%<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 id=\"major-benefits\" class=\"wp-block-heading\">Major Benefits<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Lower Taxes:<\/strong> Fixed rates are much lower than standard GST.<\/li>\n\n\n\n<li><strong>Simplified Compliance:<\/strong> Only\n<ul class=\"wp-block-list\">\n<li>Quarterly payment (CMP&#x2011;08)<\/li>\n\n\n\n<li>Annual return (GSTR&#x2011;4)<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Better <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/cash-flow\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Cash Flow<\/a>:<\/strong> Less frequent filings = more <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/liquidity\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">liquidity<\/a>.<\/li>\n\n\n\n<li><strong>Minimal Documentation:<\/strong> No complex invoicing or ITC tracking.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"limitations-costs\" class=\"wp-block-heading\">Limitations &amp; Costs<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>No Input Tax Credit (ITC):<\/strong> Can&#x2019;t claim taxes paid on purchases.<\/li>\n\n\n\n<li><strong>Intra&#x2011;State Only:<\/strong> Not for inter-state supplies or e&#x2011;commerce.<\/li>\n\n\n\n<li><strong>Restricted Invoices:<\/strong> Must issue <strong>Bill of Supply<\/strong>, not tax invoice, and display &#x201C;Composition taxable person&#x2026;&#x201D;.<\/li>\n\n\n\n<li><strong><a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/sector\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Sector<\/a> Limits:<\/strong> Not allowed for pan masala, tobacco, ice cream manufacturers, casual or non-resident taxpayers.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"how-to-opt-in\" class=\"wp-block-heading\">How to Opt In<\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>New Registrants:<\/strong> Choose the Composition Scheme in <strong>Form GST REG&#x2011;01<\/strong> during registration.<\/li>\n\n\n\n<li><strong>Existing Registrants:<\/strong> Submit <strong>Form CMP&#x2011;02<\/strong> before the start of financial year.<\/li>\n\n\n\n<li>Provide stock details via <strong>Form CMP&#x2011;03<\/strong>, if migrating from regular GST.<\/li>\n<\/ol>\n\n\n\n<h2 id=\"filing-payment-schedule\" class=\"wp-block-heading\">Filing &amp; Payment Schedule<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Quarterly Tax Payment:<\/strong> Form <strong>CMP&#x2011;08<\/strong>, due by 18th of month after quarter.<\/li>\n\n\n\n<li><strong>Annual Return:<\/strong> Form <strong>GSTR&#x2011;4<\/strong>, due by April 30 of next FY.<\/li>\n\n\n\n<li><strong>Stay alert:<\/strong> Exceeding turnover or changing business activity = must file Form <strong>CMP&#x2011;04<\/strong> to exit .<\/li>\n<\/ul>\n\n\n\n<h2 id=\"final-takeaway\" class=\"wp-block-heading\">Final Takeaway<\/h2>\n\n\n\n<p>The Composition Scheme is perfect for small, intra&#x2011;state businesses aiming for simplified taxes and fewer returns. Just be mindful of its restrictions&#x2014;no ITC, specific product\/service exclusions, and no inter-state trade.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The GST Composition Scheme is a simplified GST regime for small taxpayers. Instead of paying regular GST rates and filing monthly returns, eligible businesses can pay a fixed tax rate on turnover, file quarterly, and submit one annual return. Who Can Opt? You can choose this scheme if: Tax Rates Under the Scheme Category CGST [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7933","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7933","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7933\/revisions"}],"predecessor-version":[{"id":7934,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7933\/revisions\/7934"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}